Joe’s Fly-By-Night Oil Company

Homework Assignment for Week 4:

For Week 4, please complete the following for Joe’s Fly-By-Night Oil Company, whose financial statements are shown below:

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• Prepare a ratio analysis for the fiscal year ended Dec 31, 2012. Organize your analysis per the following outline:

(1) Liquidity
– Current ratio
– Quick ratio
Comments on liquidity

(2) Asset management
– Total Asset turnover
– Average collection period (ACP)
Comments on asset management

(3) Debt management
– Debt ratio
– Times interest earned
Comments on debt management

(4) Profitability
– Net profit margin
– Return on Assets (ROA)
– Return on Equity (ROE)
– Extended Du Pont equation
Comments on profitability to include your comments on the sources of ROE
revealed by the Du Pont equation

(5) Market value ratios
– PE ratio
– Market to book ratio
Comments on the market value ratios

For the purposes of this exercise, assume the following data for Joe’s Fly-By-Night Oil:

Stock price on Dec 31, 2012…$50.00
Number of common shares outstanding on Dec 31, 2012…1,000

Case Study Tasks:

1. Refer to the Case Study topic lecture on the Week 3 Content page. Using the information you obtained last week, complete the Part 2, Financial Overview portion of the case study report and submit it along with your regular homework (use a separate file for the financial overview). Note that your Financial Overview should contain:

a. A Sales and Income Record, to include sales and net income figures for 2008-2012 and a graph displaying the trends.

b. Comments on the Sales and Income Record.

c. A list of the company’s major expenses for FY 2012 and a pie chart showing the Expense Distribution.

d. Comments on the expense distribution.

e. A list of the company’s major assets for FY 2012 and a pie chart showing the Assets Distribution.

f. Comments on the assets distribution.

g. A list of the company’s major capital accounts for FY 2012 and a pie chart showing the Capital Structure.

h. Comments on the capital structure.

2. Revise your Company Overview file based on your instructor’s feedback when received.

3. Refer to your online sources of information. Download and save the income statement, balance sheet, and statement of cash flows for 2012 for Wendy’s (you will need them next week for comparison to McDonalds). Once you have obtained the data, it would be a good idea to transfer it to an Excel spreadsheet.